Correlation Between Litigation Capital and Bloomsbury Publishing

Can any of the company-specific risk be diversified away by investing in both Litigation Capital and Bloomsbury Publishing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Litigation Capital and Bloomsbury Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Litigation Capital Management and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on Litigation Capital and Bloomsbury Publishing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Litigation Capital with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Bloomsbury Publishing.

Diversification Opportunities for Litigation Capital and Bloomsbury Publishing

0.49

Correlation Coefficient

Litigation Capital  Bloomsbury Publishing

Very weak diversification

The 3 months correlation between Litigation and Bloomsbury is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Litigation Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Litigation Capital Management are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Litigation Capital i.e., Litigation Capital and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between Litigation Capital and Bloomsbury Publishing

Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the Bloomsbury Publishing. In addition to that, Litigation Capital is 1.64 times more volatile than Bloomsbury Publishing Plc. It trades about -0.32 of its total potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about -0.12 per unit of volatility. If you would invest  66,400  in Bloomsbury Publishing Plc on December 5, 2024 and sell it today you would lose (8,200) from holding Bloomsbury Publishing Plc or give up 12.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Litigation Capital Management  vs.  Bloomsbury Publishing Plc

Litigation Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Litigation Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bloomsbury Publishing Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Litigation Capital and Bloomsbury Publishing

The main advantage of trading using opposite Litigation Capital and Bloomsbury Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, Bloomsbury Publishing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bloomsbury Publishing will offset losses from the drop in Bloomsbury Publishing's long position.

The idea behind Litigation Capital Management and Bloomsbury Publishing Plc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.